We are not a law firm. Do not consider our information as legal advice. This information has been summarized based on our legal inquiries. Information can become obsolete from one day to another due to changes in laws, regulations, or government procedures. Consult labor and tax attorneys for legal advice. (Note from HR Mexico staff)
Hiring Employee(s) in Mexico
To hire and pay employees in Mexico whether the employee is a Mexican or foreign national, the company must be a legal entity in Mexico registered with IMSS (Mexican Social Security) and SAT (Mexico's equivalent to the IRS in the United States of America.)
The employer and the employee will need to sign an employment contract (The employment agreement is mandatory in Mexico.) It is recommended that the employee provide the following documents / information:
The employment contract should contain the following basic information at minimal:
The employment contract should be initialed on all pages by all parties, signed by all parties, and finger prints of the employee (ideal.) The employee will need to be registered with IMSS as an employee of the employer within 5 business days of the start date to avoid fines and/or penalties.
In addition to the employment contract, it is highly recommended that the employment contract refer to the following:
The Mexican Federal Labor Law was amended for the first time in 40 years in 2012. Here are some key points from the amended Federal Labor Law related to hiring employees in Mexico: (This is based on our legal consultation.)
The new article 35 FLS establishes that employment contracts can be entered into for a specific period or project (as in the past), seasonal activities (new) or for an indefinite period of time (as in the past) and may be subject to a trial period or initial training period (new) . If nothing is stipulated in the employment contract, then the employment contract is deemed entered into for an indefinite period of time.
The new Article 39-A FLS establishes that for employments entered into for an indefinite period of time or that have entered into for more than 180 days, a trial period not exceeding 30 days may be established for the only purpose of finding out if the employee has the necessary knowledge for his/her position. For managers and executives, the aforementioned trial period may be extended up to 180 days. If at the end of the trial period, in the opinion of the employer, and taking into consideration the opinion of the Mixed Commission on Productivity, Education and Training, the employee has not demonstrated that he/she has the necessary knowledge to perform, the employment relationship may be terminated without responsibility for the employer (i.e. no severance pay).
The new Article 39-B establishes a “training contract” (contrato de trabajo para capacitación inicial) whereby an employee is hired for the purpose of acquiring the knowledge or skills necessary for the activity for which he/she will be hired. “Training Contracts” may be entered into for a maximum period of up to 3 months (general workers) or up to 6 months for managers or executives or workers that require specialized professional knowledge. If at the end of the training period the employee cannot demonstrate, in the employer’s opinion and taking into account the opinion of the Mixed Commission on Productivity, Education and Training, that he/she possess the necessary knowledge or skills, the employment relationship can be terminated without any responsibility for the employer.
Art. 39-D establishes that the periods of trial or training contracts cannot be extended. Also, trail and training contracts cannot be combined nor can they be repeated for the same employee, even if the employee should fill a different position within the same company.
Art. 39-F establishes that for the case of seasonal or peakload work, employment agreements for an indefinite period of time can establish intermittent work schedules.
Employees can now be hired per hour provided the provisions on the minimum salary and maximum word shift and overtime are complied with (Art. 83 FLS).